The ECB kept interest rate unchanged at today’s meeting. Analysts at Rabobank continue to expect the ECB to make further steps towards the exit in June.
Key Quotes:
“It is always a challenge when you have to say something when you really don’t want to. And sometimes you can’t just run away, you have to bide your time. But Mr. Draghi can cope with such a situation like no one else, as he has amply demonstrated in the past. And several in-depth questions for Mr. Constancio – who attended his last GC meeting – provided a welcome distraction.”
“A gradual absorption of slack and rising wage growth (“some encouraging signs”) would appear sufficient at this stage for the ECB not to change its course, although the President acknowledged that “current developments” were important for the decisions that lie ahead of it, especially the question of whether the recent weakness was signalling the start of a further decline in future growth or simply a normalization to still decent growth levels.”
“We feel that that these caveats were first and foremost intended to signal that the ECB can still tweak the timing and pace of its normalization in response to any future developments without necessarily changing the general direction of its policy. For now we believe the ECB will not change tack, provided the economic outlook does not change materially.”
“It is our view that any uncertainty hereof is likely to be expressed in the timing of rate hikes rather than QE. The June meeting – which comes with updated projections – still remains the most likely date for an overhaul of its forward guidance and the announcement of future steps to end QE. We expect a final extension to end-2018, paired with an overhaul of the communication framework.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.